Worked-example setupScope and assumptions
- Granite Harbor Manufacturing is the fictional Unit 2 classroom company and continues to manufacture cabinets after selling its separate hardware line.
- The arrangement qualifies as a Topic 606 contract; the cabinet system, routine installation, and maintenance series are three performance obligations.
- Fixed consideration is $120,000 and evidence supports including the full $12,000 deadline bonus.
- Comparable expedited installation sells for $20,000, so assigning the bonus entirely to installation would not be consistent with the allocation objective.
- Standalone selling prices are $100,000, $20,000, and $30,000; relative standalone selling prices apply.
- The cabinet system and installation transfer in Year 1; maintenance transfers evenly over three years.
- Period
- Contract signed December 2, 2024; installation and maintenance begin January 1, 2025; Year 1 ends December 31, 2025
- Units
- US dollars
- Rounding
- Whole dollars
Contract calculation
Granite Harbor includes $120,000 of fixed consideration and a supported $12,000 deadline bonus, producing a $132,000 transaction price.
| Performance obligation | Standalone selling price | Relative allocation | Year 1 revenue |
|---|---|---|---|
| Cabinet system | $100,000 | $88,000 | $88,000 |
| Routine installation | 20,000 | 17,600 | 17,600 |
| Three-year maintenance | 30,000 | 26,400 | 8,800 |
| Total | $150,000 | $132,000 | $114,400 |
With $100,000 billed and $90,000 collected, Granite Harbor reports a $10,000 receivable. Performance exceeds billing by $14,400, and the next invoice depends on another month of maintenance, producing a separate contract asset. The calculation verifies the consequences of the stated facts; it does not replace the contract, obligation, constraint, or transfer analysis.
Verified calculation · relative ssp allocation
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- reported allocations
- 3 fields
Inspect data
{
"cabinet_system": 88000,
"installation": 17600,
"maintenance": 26400
}- standalone selling prices
- 3 fields
Inspect data
{
"cabinet_system": 100000,
"installation": 20000,
"maintenance": 30000
}- transaction price
- 132,000
Recomputed result
| Measure | Value |
|---|---|
| cabinet system allocation ratio | 0.6667 |
| cabinet system expected allocation | 88,000 |
| installation allocation ratio | 0.1333 |
| installation expected allocation | 17,600 |
| maintenance allocation ratio | 0.2 |
| maintenance expected allocation | 26,400 |
| total reported allocation | 132,000 |
| total standalone selling price | 150,000 |
| transaction price | 132,000 |